Apple CEO's apology well-received by Chinese media

In this Oct. 20, 2012 photo, people line up to enter a newly-opened Apple Store in Wangfujing shopping district in Beijing. Exxon has once again surpassed Apple as the world's most valuable company after the iPhone and iPad maker saw its stock price falter, according to reports Friday, Jan. 25, 2013. Apple first surpassed Exxon in the summer of 2011. The two companies traded places through that fall, until Apple surpassed Exxon for good in early 2012. (AP Photo/Andy Wong, File)

A chastened Apple was welcomed back into the embrace of China’s government-run media Tuesday after apologizing for allegedly offering Chinese consumers second-class warranties.

After weeks of withering criticism of Apple and its warranty policies, Chinese media appeared satisfied with CEO Tim Cook’s signed letter to consumers on Monday that apologized for appearing to be “arrogant” in its earlier response to criticisms about its warranty policies and detailed a more generous plan.

The contretemps began in mid-March when the powerful China Central Television network aired a report that said Apple’s warranties for iPhones sold in China weren’t as good as those elsewhere.

“The company’s apology letter has eased the situation, softening the tense relationship between Apple and the Chinese market,” said the Global Times, a tabloid published by the People’s Daily, the Communist government’s mouthpiece. “Its reaction is worth respect compared with other American companies. CCTV also deserves our respect and encouragement for daring to criticize a business giant like Apple.”

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An article by Xinhua, the government’s official news agency, said Cook’s response was “better late than never.”

It added, “Apple’s apology and positive moves should have come earlier, but it is not too late for it to rebuild Chinese consumers’ trust.” Apple’s public response underscored the growing importance of China for Apple, which increasingly relies on the nation’s growing middle class for its growth. It also uses Chinese workers to assembly everything from MacBooks to iPads. The Wall Street Journal reported Tuesday that Apple is gearing up its assembly lines in China for its next iPhone, which could go on sale this summer. The company is also rumored to be developing a cheaper iPhone to reach millions of customers in countries like China who are attracted to Apple’s brand but cannot afford its premium price.

Some analysts say the Cupertino giant’s standing in China may have been weakened by its apology because the government now knows it will quickly yield to political pressure to preserve share in China’s booming smartphone market.

Apple had no reason to apologize, said Shanghai-based Shaun Rein, founder of China Market Research Group. After all, its warranty policies in China were similar to those in the United States.

“I think it was a mistake to apologize. It is giving credibility to the government complaints,” said Rein, author of “The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World.”

“Chinese consumers have been supportive of Apple,” he said. “It has the best customer service.”

The controversy, though, put Apple in an untenable position, Rein said. Cook has said he believes China will eventually become the company’s biggest market, and to succeed in China, foreign companies must navigate powerful government officials.

“The government clearly has Apple in its cross-hairs,” he said. “I expect the state media is going to continue to attack Apple.”

A range of theories have been offered to explain why Apple came under such sharp attack in China. Some analysts say it was a reaction to the company’s decision to not allow the government to have strong oversight of its online iTunes and App stores. Others cite government concern about the dominance of Apple’s and Google’s operating systems in the country. Still others say it was a form of payback for the way Chinese telecom giant Huawei has struggled to get business in the United States amid congressional suspicions of possible close links to the Chinese military.

Bill Bishop, a Beijing-based independent analyst who publishes the Sinocism China Newsletter, wrote Tuesday that Apple had no choice but to respond publicly to the complaints. For Apple, he said, “the merits of the charges were irrelevant and the only rational choice for its future in China was to apologize.”